Correlation Between Raytech Holding and Powell Max
Can any of the company-specific risk be diversified away by investing in both Raytech Holding and Powell Max at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Raytech Holding and Powell Max into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytech Holding Limited and Powell Max Limited, you can compare the effects of market volatilities on Raytech Holding and Powell Max and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Raytech Holding with a short position of Powell Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytech Holding and Powell Max.
Diversification Opportunities for Raytech Holding and Powell Max
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Raytech and Powell is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Raytech Holding Limited and Powell Max Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powell Max Limited and Raytech Holding is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Raytech Holding Limited are associated (or correlated) with Powell Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powell Max Limited has no effect on the direction of Raytech Holding i.e., Raytech Holding and Powell Max go up and down completely randomly.
Pair Corralation between Raytech Holding and Powell Max
Considering the 90-day investment horizon Raytech Holding Limited is expected to under-perform the Powell Max. But the stock apears to be less risky and, when comparing its historical volatility, Raytech Holding Limited is 2.46 times less risky than Powell Max. The stock trades about -0.28 of its potential returns per unit of risk. The Powell Max Limited is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Powell Max Limited on December 10, 2024 and sell it today you would lose (12.00) from holding Powell Max Limited or give up 25.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Raytech Holding Limited vs. Powell Max Limited
Performance |
Timeline |
Raytech Holding |
Powell Max Limited |
Raytech Holding and Powell Max Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Raytech Holding and Powell Max
The main advantage of trading using opposite Raytech Holding and Powell Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytech Holding position performs unexpectedly, Powell Max can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Powell Max will offset losses from the drop in Powell Max's long position.Raytech Holding vs. PepsiCo | Raytech Holding vs. Avadel Pharmaceuticals PLC | Raytech Holding vs. Alphatec Holdings | Raytech Holding vs. Merit Medical Systems |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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